COUNTRY NOTE UNITED STATES

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					                                          OECD (2008), Growing Unequal? : Income Distribution and Poverty in OECD Countries


                                                                                 COUNTRY NOTE: UNITED STATES

     The United States is the country with the highest inequality level and poverty rate across the
OECD, Mexico and Turkey excepted. Since 2000, income inequality has increased rapidly, continuing
a long-term trend that goes back to the 1970s.

                                                 Figure 1. Income inequality and poverty continue to increase, especially since 2000
                                        0.40                                                                                                                    20
                                                     Development of income inequality                                                                                        Development of income poverty             OECD
                                                                                                 USA




                                                                                                             Poverty rate (% of persons living with less than
                                        0.38                                                                                                                    18                                                   (diamond)
                                                                                                                                                                     USA (bar)
Gini coefficient of income inequality




                                                                                                                                                                16
                                        0.36
                                                                                                                                                                14




                                                                                                                         50% of median income)
                                        0.34
                                                                                                                                                                12

                                        0.32                                                                                                                    10
                                                                                              OECD

                                        0.30                                                                                                                     8

                                                                                                                                                                 6
                                        0.28
                                                                                                                                                                 4
                                        0.26
                                                                                                                                                                 2

                                        0.24                                                                                                                     0
                                                Mid-70s   Mid-80s   1990s   Mid-90s   2000s   Mid-2000                                                               Mid-70s     Mid-80s   1990s   Mid-90s   2000s   Mid-2000

Source: Growing Unequal? , OECD 2008. Income is disposable household income adjusted for household size.

                                              Rich households in America have been leaving both middle and poorer income groups behind.
                                               This has happened in many countries, but nowhere has this trend been so stark as in the
                                               United States. The average income of the richest 10% is US$93,000 US$ in purchasing power
                                               parities, the highest level in the OECD. However, the poorest 10% of the US citizens have an
                                               income of US$5,800 US$ per year – about 20% lower than the average for OECD countries.

                                              The distribution of earnings widened by 20% since the mid-1980s which is more than in most
                                               other OECD countries. This is the main reason for widening inequality in America.

                                              Redistribution of income by government plays a relatively minor role in the United States. Only
                                               in Korea is the effect smaller. This is partly because the level of spending on social benefits
                                               such as unemployment benefits and family benefits is low – equivalent to just 9% of household
                                               incomes, while the OECD average is 22%. The effectiveness of taxes and transfers in reducing
                                               inequality has fallen still further in the past 10 years.

                                              Child poverty – that is, children in a household with less than half the median income – has
                                               fallen since 1985, from 25% to 20% but poverty rates among the elderly increased from 20 to
                                               23%. Both of these trends are in the opposite direction to those of the other countries in the
                                               OECD.

                                              Social mobility is lower in the United States than in other countries like Denmark, Sweden and
                                               Australia. Children of poor parents are less likely to become rich than children of rich parents.

                                              Wealth is distributed much more unequally than income: the top 1% control some 25-33% of
                                               total net worth and the top 10% hold 71%. For comparison, the top 10% have 28% of total
                                               income.

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                                                                                                                                                                               www.oecd.org/els/social/inequality